Annuities and Life Insurance

Annuities and Life Insurance

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An annuity is a contract between an individual and an insurance company. There are many different types of annuities and individual annuities often have unique features and benefits that other investment types do not have. These features and benefits may make an annuity a very desirable investment, but the annuity may also have higher costs or surrender charges that need to be considered as well.

Advantages of Annuities

An annuity can be a useful tool in the arsenal of investment choices. Your life insurance is guaranteed by an insurance company and so too can your annuity benefits. Annuities can provide fixed rates of return that are guaranteed against loss or variable rates tied to investments held in a sub-account. Recently, annuities that provide the safety of a fixed rate, but offer some of the possible upside of the financial markets have appeared. Annuities can provide a great deal of confidence for many investors, but don’t forget that annuities can have surrender charges and additional expenses.

Fixed Annuity:

A fixed annuity might be a good fit for people who have traditionally put their money in certificates or those who want a guarantee against principal loss along with tax-deferred earnings.

  • A fixed annuity usually has a set length of time to the contract often five, six or seven years.
  • It will offer a fixed guaranteed rate. The rate may be good across the life of the contract, or it may be an introductory rate. The contract will typically have a guaranteed minimum interest rate.
  • Earnings of a fixed annuity accumulate tax-deferred.
  • A fixed annuity will likely have surrender charges that decrease over time and eventually go away entirely.
  • Some fixed annuities offer a return of principal guarantee that ensures that even if you surrender the contract early you will never get less than what you put in.
  • Some fixed annuities have MVA features that may substantially reduce the amount you receive back from the annuity if you withdraw it early.

Things to consider:

A fixed annuity held to maturity may offer a more competitive overall rate than a certificate with similar maturity. A fixed annuity is considered to be a long term investment and it is important that an investor maintain sufficient liquidity outside of the annuity for emergencies and other needs. As with all investments, understanding all of the features and benefits as well as any potential risks or costs associated with the product is the key to assessing whether it is right for you. Our CFS* advisors can help you sort through the various pros and cons as well as provide you with options of insurance companies and products available in order to help you find the right fit.

Life Insurance

  • Protecting your family or business
  • Transfer more money to your loved ones or charities
  • Enhance your retirement income

*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.

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